Everyone Would Be Dragged With The Drop Of Chinese Economy, Warns The IMF

01/25/2019

In modern global economy, the entire global economy slows down if China is unable to keep pace despite the level of stimulus injected into the US economy – which also stutters because of China slow down. .

This is the view of the International Monetary Fund which has presented an interim report on the global economy in addition to the ones it usually presents in March and October. This interim report also coincided with the World Economic Forum gathering of business and political leaders at Davos

The IMF believe that the once position of the US as a driver of global economy has changed and now it is an equal partner in the world trade and economy.

The IMF also issued warnings about in related to the possible shockwaves throughout the global economy and financial markets because of a no-deal Brexit in its short report aimed at influencing the business leaders and “thinkers” participating at the gathering at the World Economic Forum. The Fund also severely criticised Italy of almost willingly giving away its economic recovery in the dispute it had with the European Union over its budget deficit.

However, the Chinese economy and the manner in which the Chinese government is managing the economic scenario of the county was identified as the primary driver of the slowdown in the global economy over the past year and dark clouds gathering over it in the current year.

The Fund however also mentioned that China is also entitled to get some credit for the manner in which it came to the rescue of the global economy in 2009 when it implemented a huge stimulus package for spending and borrowing. Further, the country has also attempted to bring under control the debts in the economy and its state owned companies, bring down speculative property buying and prevented banks from lending in a reckless manner. And this was aided by the Chinese authorities trying to clean up its cities of corruption and pollution and helped to bring out about 10 million of its citizens from poverty every year.

Christine Lagarde, the IMF Chief, however also downplayed the chances of an imminent economic shock and attempted to sound positive and upbeat. .

But that did not deter her from issuing warnings about the fact that the way the Chinese economy goes would largely decide the path for the rest of the global economy and that the US and China should resolve their differences through negotiation and cooperation or else, the Chinese economy would suffer and the global economy would also come down with it.

“Solidarity is in all our self-interest,” said Lagarde when she had arrived at Davos.